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Mixed signals as consumer debt edges higher, defaults drop: Equifax

A consumer pays with a credit card at a store July 6, 2010 in Montreal.


Canadians bumped up their debt levels slightly in the first quarter of the year, but there are positive signs of fewer delinquencies, a new study shows.

The rate of delinquencies for three months or more has fallen by 13.4 per cent from the same time period last year to a moderate 1.2 per cent, a record low, according to the report by credit-monitoring firm Equifax Canada.

"Late-stage delinquency rates continue to show improvement, especially in the energy-rich economies of Edmonton and Calgary as well as in Vancouver and Ottawa," Cristian deRitis, senior director of consumer credit economics at Moody's Analytics, said in a news release Wednesday.

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The 1.2 per cent rate of unpaid debt in 90-day-plus delinquency, which excludes mortgage debt, is significantly lower than the 1.39 per cent posted in the first quarter of 2012, the agency said.

"This represents very positive financial control by consumers and lending institutions given the sustained low interest rate environment and improved employment rates," said Nadim Abdo, vice-president of client solutions at Equifax Canada.

But Equifax warns that rising bankruptcy filings reflect "the growing financial strains on Canadian families, particularly in Montreal and Halifax."

First-quarter consumer credit conditions were "mixed with outstanding balances rising and late-stage delinquency rates falling relative to a year ago," said Mr. deRitis.

Outstanding household debt and available credit rose in the first quarter by 3.9 per cent and 4.4 per cent, respectively, on a year-ago basis, a break in the trend in decelerating growth that began in 2011, says the report.

Total non-mortgage debt in the first quarter was $500.8-billion, up from $497-billion in the year-earlier period.

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About the Author
Quebec Business Correspondent

Bertrand has been covering Quebec business and finance since 2000. Before joining The Globe and Mail in 2000, he was the Toronto-based national business correspondent for Southam News. He has a B.A. from McGill University and a Bachelor of Applied Arts from Ryerson. More


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